Question 1. What are the three categories into which the Bureau of Labor Statistics divides everyone? Explain these categories. Question 2. Why don't banks hold loo-percent resenres? How is the amount of reserves banks hold related to the amount of money the banking system creates? Question 3. The current state of the economy is shown in Figure 1. The aggregate-demand curve and short-run aggregate-supply curve intersect at the same point on the long-run aggregate-supply curve (Point A). Use the sticky-wage theory of aggregate supply to explain what will happen to output and the price level in the long run (assuming no change in policy). What role does the expected price level play in this adjustment? LRAS Price Level Natural Quantity Rate of of Output Output Figure 1